Crude oil declined to below $90 a barrel on Thursday as traders remained concerned that the U.S. economy will fall into recession, affecting oil demand in the largest energy consuming nation.
Oil fell for the third consecutive day. Today, the Commerce Department said home builders in the U.S. started construction on 1.006 million houses in December which, according to Bloomberg, is the lowest record since 1991. In November there were 1.173 million new home starts.
U.S. crude for February fell $1.09 or 1.20 percent to $89.75 a barrel at 2:23 p.m. at the New York Mercantile Exchange. Brent crude declined 33 cents or 36 percent to $89.14 a barrel on London's ICE Futures Europe exchange.
Earlier on Thursday prices rose as Iran's oil minister said the Organization of Petroleum Exporting Countries didn't need to increase crude output at its next session on February 1. Oil prices also climbed as traders speculated U.S. heating oil demand will rise due to colder weather.
Ben Bernanke, Chairman of the U.S. Federal Reserve said today the economy outlook for growth in 2008 has worsened but the Fed was not forecasting a recession for this year. He also said that more interest rate cuts may be necessary.